WPP and Microsoft team to launch stronger rival to Google’s DoubleClick ad exchange

At least that’s what we think they’re doing, digital ad exchanges being one of the more mystifying elements of an increasingly mystifying media business.

Microsoft and WPP’s Real Media Group, a division of 24/7 Real Media, have signed a three-year deal to the make the Microsoft Advertising Exchange their exclusive third-party digital advertising exchange, basically a large pot containing loads of online ad inventory. Hitherto such exchanges have been mainly about shifting non-premium digital ad opportunities but this deal apparently includes the premium stuff as well.

The benefit for Microsoft is more ads from WPP clients, for WPP it gives the marcoms giant access Microsoft properties including MSN, Hotmail and Skype. Microsoft’s Bing search engine is not part of the package, presumably because of privacy concerns.

Microsoft’s partners already include AOL and Yahoo so they will an unofficial part of the deal too.

“This deal is about better matching of supply and demand of inventory in the marketplace,” says Rik van der Kooi, the corporate vice president of the Microsoft Advertising Business Group VP Rik van der Kooi. “Publishers are concerned that their sites don’t generate the maximum yields of fair value. Advertisers complain about it being too hard to reach their maximum audiences across the right sites.”

It also seems to be yet another attempt by Microsoft to challenge Google’s dominance of the online ad market through its DoubleClick system. Google is by far the biggest online ad operator and DoubleClick is regarded by many parties as the easiest and most efficient system to use.

It’s interesting that WPP is lining up behind Microsoft. WPP boss Sir Martin Sorrell famously dubbed Google a ‘frenemy’ of his advertising and media group. This is a big call from WPP in the digital ad stakes, one that might not be greeted very warmly at Google Towers.